10 Things the Ticket Industry Doesn't Want You To Know

The Wall Street Journal wrote an article two years ago titled “10 THINGS TICKET BROKERS WON’T TELL YOU” (talk about calling the kettle black. How about 10 things Wall Street won’t tell you…um make it a 1000!). Anyhow, we plan to tell all and answer questions you might ask in our Musical Chairs blog. We will address the “10 Things” over the next few weeks.

“We Thrive On Your Confusion”
In recent years you may have noticed the options for buying event tickets have been expanding. It is not very confusing (leave that to Wall Street) if you break it into two markets: The Primary market & the Secondary Market. The Primary market is the buyers and sellers tickets (think ITO-Initial Ticket Offering) issued for the FIRST time. This includes venue box offices, fan clubs, event promoters, teams selling season and individual game tickets, Telecharge (mostly plays) and the 1000 pound gorilla in the industry-Ticketmaster/Live Nation (Now known as Live Nation Entertainment “LNE”). Today, due to their control of most venues, LNE has acquired a virtual monopoly on primary ticketing.

The Secondary market refers to the re-selling of tickets that have already been sold on the Primary market. Historically, it has been cheaper to buy tickets from the PRIMARY market if they were available, but these days almost 50% of tickets are sold for less than face value on the secondary market. For Example, Dodger Dugout Club seats have a $600 face Value and are generally sold in the secondary market for approximately $300-$350 per ticket (When the Dodgers are winning!!). There are three main segments of the secondary market: Consolidators, ticket brokers and eBay/craigslist. Consolidators are the mass marketers of tickets, the majority of which are owned by Ticket Brokers with a minority of tickets owned by individuals. These include StubHub (which is promoted as a fan-fan exchange, but in reality is actually a broker to fan exchange), TicketsNow (Owned by TicketMaster), Ticket Liquidator (Part of something called Ticket Network), and RazorGator as well as Team Websites. Aside from RazorGator, which is somewhat of a hybrid, the KEY attribute of a consolidator is they do NOT own/speculate on tickets. One of the problems of buying fan to fan, especially from Stub Hub, is the following: I apologize for the delay in the confirmation of your order 32107252. When you buy tickets at StubHub, you are buying from other fans that have chosen to sell their tickets. We do everything we can to ensure that sellers honor all sales. Unfortunately, in this case, the seller is unable to confirm your ticket order. While they often try to replace the tickets, when a good deal does occur they often can’t replace the tickets nor will they spend the market price to do so.

The problem for a seller going to a consolidator is that they will never buy them from you outright. As a seller you can sometimes make more money this way, but it is often more time consuming than selling the tickets to a broker and puts you in the role of broker. Most importantly, you are putting yourself at risk for the tickets not selling. One of the psychological problems of Sellers is they tend to over-value their personal assets (we rarely see that in the Real Estate market). Thus, some good advice for those of you who want to play the role of speculator/broker: If you put tickets up on one of these sites, you are best to monitor them frequently and adjust to market fluctuations as the prices change-sometimes rapidly and generally downward. Call a knowledgeable broker or two to see what they would pay. Put it slightly (10-30%) above that price as opposed to competing with other often overpriced tickets and riding the market down. The market one sees on the internet is often inaccurate and overpriced.

If you do get someone to help you at a consolidator such as Stub Hub, TicketsNow or Ticket Network they generally know little if anything about helping someone get value. The employees engaged with the public are low paid and know little about the events. The main skill of these companies are mass marketing and internet search Optimization. For example, call Stub Hub sometime and ask about the seat numbers in section D or E at the Hollywood Bowl. I believe that they could not tell you that seats 5-7 are substantially different than seats 33-35 (neither are great, but the view is substantially better from 5-7 than 33-35). In fact, Stub hub often cannot even tell you which seat numbers you are getting. At TicketsNow many employees are former TicketMaster operators. Have any of you enjoyed that ordeal? It would be surprising if they could even count to 35 and may think seat 34 is between 33 & 35 (the seats are numbered odd or one side of the bowl and even on the other).

Part 2 next week...

Rock On,
Brad Schy, The Ticket Maestro of Musical Chairs